Finance co said to dupe 30,000 in TN

People in Tamil Nadu have once again become the victim of a finance scam. It is alleged that up to 30,000 people from different parts of the state have lost Rs 420 crore to a Mumbai-based company, City Limouzines India Ltd.

Over the past two-three days, the Chennai City Police Commissioner’s office has been flooded with complaints from the angry people who got cheated.

“Over 1,000 complaints have been received and our initial investigation reveals that up to 30,000 people got cheated. A case against the company has been booked under Section 420 (cheating) of the Indian Penal Code and we are searching for Abdul Massod, who was running the business,” a senior police official said.

One of the victims, retired government employee Ramachandran S, claimed the company had issued preference shares in the name of City Realcom Limited and lured investors by asking them to invest a minimum of Rs 1.40 lakh with the promise that each one of them would get a monthly return of Rs 7,775 per Rs 1.40 lakh.

At the end of the 60-month scheme, the customer would get Rs 50,000 over and above the principal amount. The company paid interest every month for a year, but its cheques started bouncing since August.

“When we complained to the company, they cited different reasons and, for the last three days, the office of the company was closed in Chennai,” stated another customer.

Business Standard also made several attempts to meet the company’s representatives at its Kodambakkam office in Chennai, but it was found closed on all the visits.

The police official said the exent of the financial fraud was yet to be ascertained. “We are yet to verify the transaction books,” he said.

“The Economic Offences Wing of the Chennai City Police will investigate the case. They will raid the company’s office on Tuesday,” he added.

According to the police official, the Mumbai-based company, which was operating in the city for the past one year, had established its offices across the state.

“We are tracking the people who were working with the company across the state. We are also getting details about the number of branches and their customers,” the official said.

It was also learnt that the company was operating with a fake RBI licence since 2006. Its registered office is said to be located in Mumbai.

This is not the first time that such a case has come to light in Tamil Nadu. There have several complaints earlier too regarding alleged cheating by nidhi, chit and finance companies. Over 140 cases are pending with the Economic Offences Wing, Tamil Nadu police.

While the quantum of the total financial fraud committed in the state could not be ascertained, the size of the fraud in the top six cases (excluding City Limouzines) was Rs 1,168 crore (see table), with over 676,000 victims.